Business organizations

1.What is business organization?

Business organization is a profit-seeking enterprise that serves as the main link between scarce resources and consumer satisfaction.

2.What is the main purpose of a business organization?

These businesses compete with one another for the chance to satisfy people's wants.

3.What are the major types of business organization?

There are three major kinds of business organizations: the sole proprietorship, the partnership and the corporation .

4.What is a sole proprietorship?

The sole proprietorship is a business owned and run by one person.

5.What are the advantages of a sole proprietorship?

The main advantage of a sole proprietorship is that it is the easiest form of business to start and run.

6. What are the disadvantages of a sole proprietorship?

The major disadvantage of a sole proprietorship is the unlimited liability that each proprietor faces.

7.What is unlimited liability?

The major disadvantage of a sole proprietorship is the unlimited liability that each proprietor faces. Since the business and the owner are legally the same, the sole proprietor is liable for all financial losses or debts that the business may incur.

8.What is partnership?

A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit.

9.What forms of partnerships do you know?

I know two forms of partnership: a general partnership and limited partnership/

10.What did the difference between a general partnership and limited partnership?

General partners own the business, work in it and share the profits and losses. They are responsible for the management of the business and usually agree with each other before making any major decisions. There may be a special type of partnership, called limited partnership . Limited partners are only liable for the amount they have invested in the business. They are usually not involved in the management of the firm.

11.What are the advantages of partnership?

Partnerships have more advantages than sole proprietorships. Like sole proprietorship they are easy to form and often get tax benefits from the government.

12. What are the disadvantages of partnership?

The major disadvantage is unlimited financial liability. It means that each partner is responsible for all debts and is legally responsible for the whole business. But one of the greatest problems in partnerships is that partners may disagree with each other causing management conflicts.

13.What is corporation?

A business corporation is an institution established for the purpose of making profit.

14.What is necessary to form a corporation?

People, who would like to form a corporation, must file for permission in the state where the business will have its headquarters.

15.Who owns a corporation?

Shareholder or stockholder owns a corporation.

16.What are the advantages of corporate form of ownership?

The major advantage is the ability to acquire greater financial resources than other forms of ownership. The next advantage is that the corporation attracts a large amount of capital and can invest it in plants, equipment and research.

17.What disadvantages do corporations have?

Corporations face some major disadvantages. It is difficult and expensive to organize a corporation. The process of obtaining a charter usually requires the services of a lawyer.